You may proceed to the site by clicking here, however some pages might not
work correctly.

LATEST VIDEOS

More Videos:

Rates from Bankrate.com

Mortgage

Credit Cards

Auto

YUM! Is Far From Appetizing

Written by: Bill Gunderson10/15/13 - 6:30 AM EDT

Tickers in this article:
AA AAPL EOG JPM NFLX PCLN WFC YUM

NEW YORK (TheStreet) -- There are a lot of lessons to be learned from the craziness going on in the market right now. We're going to take a look at the facts as they present themselves at the current moment.

We are finally starting to see some of the leading stocks begin to roll over a bit as are now in earnings season.

Last week was the start of earnings season. Several big companies reported earnings: Alcoa, YUM! Brands, JPMorgan Chase and Wells Fargo were the biggest ones.

So I thought this would be a good time to analyze the company that deals with the four food groups here in America: fried chicken, pizza, root beer and tacos -- don't tell me you never eat this stuff! We're talking about YUM!, the owner of KFC, Pizza Hut, Taco Bell, Long John Silver, A&W, etc.

Analysts were expecting this quarter's earnings to be 93 cents per share on the stock. Well, YUM! reported last week and they fell short. Am I surprised? No, and here's why.

My "Best Stocks Now" app requires that a stock first is a superior performer in the long term, intermediate term and short term. No laggards allowed!

Second, the stock must makes sense from a valuation point of view. In other words, there has to be justification for the stock going considerably higher over the next three to five years, no exceptions.

Third, a stock has to have a healthy, vibrant stock chart. None of this sideways or sloping downward business (this is why I never bought Apple all the way down from $705 down to $385).

Now let's look at the analysis I did of YUM! Brands recently before it reported earnings last week, so you can see why I am not surprised that YUM fell short.

Performance: How has the stock performed over the years? Well, not too bad; YUM! happens to be one of the better-run franchises around. Over the past 10 years YUM! has been doubling your money about every four years. That's an average of almost 18% returns -- this is pretty good.